This is total bull... if the machine is not able to give a ticket it should know so before the transaction begins and take itself out of service.

At $25 each for a roundtrip to the airport I am now out $50 until NJT gets around to the refund to my bank card.

• They are very slow, requiring several laborious steps to assign ticket origin/destination, price, number sold, choice of cash/debit/credit, plus they have the extra warning screen for RTX tickets, slowing the process even further
• When using a credit card, the machine used to print the entire account number on the receipt (no no-receipt choice available for credit-card purchases, but at least they X-out the first twelve digits now)
• They have those annoying "exact fare only" and "no bills accepted" modes, leaving passengers to dig in pockets or purse or running off to corner stores to obtain what the TVM demands (on the same note, I've seen "no debit cards" and "no credit cards" modes also)
• They do go out of service (could be due to being out of paper for printing tickets, but knowing these machines, it's probably data error); this leads to problems with conductors who would still insist on charging the $5 surcharge despite the unavailability of tickets at the station
• Thanks to their slow speed, they are not a qualified substitute for ticket agents, although they may be suitable for non-staffed stations (i.e. should a better type of machine become available)
• The current types are either rail-only, bus-only or LRT-only, without cross-availability of all types of ticket; this renders them quite inflexible (e.g. it would be nice to be able to get a monthly bus pass or a bus ticket at the train station; it would add convenience to a train-bus transfer if a passenger could simply buy a bus ticket at the train station TVM and just hand it to the bus driver as opposed to fishing for exact fare when leaving the platform)

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What type of bus tickets would they sell? All of NJ Transit's local routes are exact fare, pay as you board.

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The bus-ticket TVMs (i.e. the ones at Newark Penn Station) sell single-journey local, i.e. intrastate trips (which means you can just give the ticket to the bus driver in lieu of exact fare, I have done this), single-journey and round-trip interstate tickets, and monthly bus passes (both intrastate and interstate). The tickets for local fare are even accepted at locations other than Penn Station; you could buy a ticket at Penn and use it on a bus that operates on Broad Street.

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Do the distance runs (i.e. the ones to Port Authority, Atlantic City, etc...) require tickets?

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Not if you don't board at a location where tickets are unavailable—bus drivers will take cash fare, exact fare not required depending on the route (although most of the buses going to PABT out of Hudson County require exact fare, such as routes 125 from Journal Square and 126 from Hoboken Terminal). AFAIK, there are TVMs at both Hoboken Terminal and Journal Square that sell NJT bus tickets...although I do believe that bus route 319 would require a ticket for all locations. (I've seen people paying cash fare at the PABT, though, and wondered why NJT didn't lift the nasty idea from its rail operations of charging a step-up surcharge when boarding a bus without a ticket at locations like that...)